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Hybrid Vehicles, Plug-In Tax Credits

In 2019, more than 100,000 plug-in hybrid vehicles and over 400,000 hybrid vehicles were sold, according to the U.S. Department of Energy. Some of the most popular plug-in hybrid vehicles were from Toyota, such as the well-known Prius and Pruis Plug-In, Camry, Corolla, and RAV4 hybrid plug-in models. While it does not sell 100,000 units each year anymore, the Toyota Pruis Hybrid sold nearly 48,000 vehicles in 2019.

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Are there Credits for Buying a New Hybrid or Plug-In Hybrid Vehicle?

If you purchased a hybrid motor vehicle in 2020, you may be able to claim credit on your 2020 Tax Return. You may also be able to amend a tax return to claim credit if you purchased it in a previous year and owed taxes. This credit is nonrefundable and will only offset your tax liability for a given tax year.

The Qualified Plug-In Electric Drive Motor Vehicle Credit can be worth up to $7,500 in nonrefundable credit. It applies to plug-in hybrids, or PHEV, and plug-in electric, EV or PEV, vehicles.

When you prepare and e-File your 2020 Tax Return on eFile.com, you don't need to worry about which of the credits above you qualify to claim on your tax return. Simply answer a couple of questions and the eFile app will select the correct tax credit form(s) for you to complete. The app will also calculate and enter your credit amount on your return. See how much your 2021 Refund could be and prepare to prepare for Tax Day, April 15, 2021. Read on to learn more about these credits.

Qualified Plug-In Electric Drive Motor Vehicle Tax Credit for Hybrids

This credit can be claimed for a qualified plug-in hybrid vehicle that was put into service in the U.S. during 2020. The vehicle has a simple set of guidelines to meet:

  • The vehicle in question weighs less than 14,000 pounds,
  • It is powered significantly by electric motor which holds a minimum of 4 kilowatt hours and can be charged externally, and
  • The vehicle was purchased new.

A qualifying vehicle is not a traditional hybrid vehicle, or HEV. Some popular hybrid vehicles that are not eligible for the credit include the non plug-in models of the Toyota Prius, Toyota RAV4 Hybrid, Toyota Camry Hybrid, Ford Fusion and Milan Hybrids, and the Honda Insight and Accord Hybrids. The plug-in versions of these models, however, do qualify.

This IRS tax credit can be worth anywhere from $2,500 to $7,500. The amount is determined by the power storage of the battery. In general, all electric vehicles can claim more of the credit than plug-in hybrid vehicles as their battery has more storage. Note that this credit is nonrefundable and will not generate a refund on its own. In other words, if you owe $2,500 on your 2020 Taxes, but claim credit for a PHEV worth $5,000, you will receive $2,500, and the remaining $2,500 will be eliminated.

The credit may be applied to certain two-wheeled vehicles as well. This follows the same guidelines as a four-wheeled vehicle, except the battery capacity must be at least 2.5 kilowatt hours instead of 4. The amount, however, can be claimed up to $2,500 instead of $7,500.

How Long do I Have to Claim the Credit?

This credit will start to phase out once a company has sold 200,000 qualifying vehicles. Currently, as of December, 2020, General Motors is the only company to reach this threshold for plug-in hybrids. The phaseout period begins by allowing taxpayers to claim 50% of the credit if the purchasing of the vehicle took place in the first two quarters since the phaseout initiated. From there, 25% of the credit can be claimed for the second two quarters. See General Motors in the table below to see these amounts.

When you prepare and file your 2020 Tax Return on eFile.com, you will answer simple questions that will allow eFile app to claim the credit, if applicable. The form generated will be Form 8936 - eFileIT.

Vehicles that are Eligible for the Credit

The following plug-in hybrids, according to the IRS, are eligible for the Qualified Plug-In Electric Drive Motor Vehicle Tax Credit. The amounts vary based on the power storage capability of the battery:

Make
Model(s)
2020 Credit
American Honda Motor Co., Inc.
Accord (2014)
$3,626
American Honda Motor Co., Inc.
Clarity Plug-In Hybrid (2018-2021)
$7,500
Audi of America, LLC
A3 e-tron (Ultra) (2016-2018)
$4,502
Audi of America, LLC
A8L PHEV (2020); Q5 PHEV
$6,712
Bentley
Bentayga Hybrid (2020)
$7,500
BMW of America
i3(s) Sedan (2014-2020); X5 xDrive45e (2021);
MINI Cooper S E Hardtop 2 Door (2020)
$7,500
BMW of America
i8 Coupe (2019, 2020); i8 Roadster (2019, 2020)
$5,669
BMW of America
i8 (2014-2020)
$3,793
BMW of America
X5 xDrive40e (2016-2018)
$4,668
BMW of America
330e (2016-2018);
MINI Cooper S E Countryman ALL4 (2018-2019)
$4,001
BMW of America
530e (xDrive) (2018, 2019); 740e (xDrive) (2018, 2019)
$4,668
BMW of America
745e xDrive (2020-2021); 530e (xDrive) (2020-2021);
330e (xDrive) (2021); X3 xDrive30e (2020-2021)
$5,836
BMW of America
MINI Cooper S E Countryman ALL4 (2020)
$5,002
FCA (Fiat, Chrysler Automobiles) North America Holding, LLC.
Chrysler Pacifica PHEV (2017-2020)
$7,500
Ferrari
SF90 Stradale (2020-2021)
$3,501
Fisker Automotive
Karma Sedan (2012)
$7,500
Ford Motor Company
C-MAX Energi (2013-2017); Fusion Energi (2013-2018)
$4,007
Ford Motor Company
Fusion Energi (2019-2020)
$4,609
Ford Motor Company
Ford Escape Plug-in Hybrid (2020)
$6,834
Ford Motor Company
Lincoln Aviator Grand Touring (2020-2021)
$6,534
General Motors, LLC.
Chevrolet Volt (2011-2019);
Cadillac ELR (2014, 2016);
Cadillac CT6 Plug-In (2017-2018)
*$$7,500 if acquired through 3/31/2019;
$3,750 (4/1/2019 - 9/30/2019);
$1,875 (10/1/2019 - 3/31/2020)
Hyundai
Sonata Plug-in Hybrid Electric Vehicle (2016-2020)
$4,919
Hyundai
Ioniq EPlug-In Hybrid Electric Vehicle (2018-2019)
$4,543
Jaguar Land Rover North America, LLC.
Land Rover Range Rover (Sport) PHEV (HSE) (2019)
$7,087
Jaguar Land Rover North America, LLC.
Range Rover (Sport) PHEV (2020) 
$6,295
Karma
Revero (2018)
$7,500
Kia Motors America, Inc.
Optima Plug-In Hybrid (2017-2020)
$4,919
Kia Motors America, Inc.
Niro Plug-In Hybrid (2018-2020)
$4,543
Mercedes-Benz USA, LLC
S550e PHEV (2015-2017);
GLE550e 4m PHEV (2016-2018);
GLC350e 4M PHEV (2018-2019)
$4,460 (revised 1/24/2018)
Mercedes-Benz USA, LLC
C350e PHEV (2016-2018)
$3,501 (revised 1/24/2018)
Mercedes-Benz USA, LLC
GLC 350 4M EQ (2020);
S560e EQ PHEV (2020)
$6,462
Mitsubishi Motors North America, Inc.
Outlander PHEV (2018-2020))
$5,336
Polestar Automotive USA Inc.
Polestar 1 (2020)
$7,500
Porsche Cars North America, Inc.
918 Spyder (2015)
$3,667
Porsche Cars North America, Inc.
Cayenne S E-Hybrid (2015-2018)
$5,336
Porsche Cars North America, Inc.
Cayenne E-Hybrid (Coupe) (2019-2020);
Panamera 4 PHEV (all models) (2019-2020)
$6,712
Porsche Cars North America, Inc.
Panamera S E-Hybrid (2014-2016)
$4,752
Porsche Cars North America, Inc.
Panamera 4 PHEV (all models) (2018)
$6,670
Subaru
Crosstrek Hybrid (2019, 2020)
$4,502
Toyota Motor Sales, U.S.A., Inc.
Prius Plug-in Hybrid (2012-2015)
$2,500
Toyota Motor Sales, U.S.A., Inc.
Prius Prime Plug-in Hybrid (2017-2020)
$4,502
Toyota Motor Sales, U.S.A., Inc.
RAV4 Prime Plug-In Hybrid (2021)
$7,500
VIA Motors, Inc.
2500 Extended Range Electric Passenger Van (2014);
VIA 1500 Extended Range Electric Truck 4WD (all body styles) (2014);
2500 Extended Range Electric Cargo Van (2014);
1500 Extended Range Electric Truck 2WD (All body styles) (2014)
$7,500
Volvo Cars of North America, LLC
S60 (2019); XC60 (2018-2019); XC90 (2018-2019);
XC90 Excellence (2018-2019)
$5,002
Volvo Cars of North America, LLC
S60 (2020-2021); S90 (2020-2021); (V60 (2020-2021);
X60 (2020-2021); XC90 (2020-2021)
$5,419
Volvo Cars of North America, LLC
XC90 (2016-2017)
$4,585

*Companies who have initiated phasing out indicate different, decrementing values based on the year purchased. Currently, only General Motors and Tesla have begun this process.

For a list of all qualifying electric vehicles, click here.

Additionally, some states offer cash rebates as an incentive for its taxpayers to invest in a plug-in electric vehicle. California, for example, offers up to $1,000 in addition to the IRS tax credit.

If the vehicle in question was purchased as a business expense, it may be able to be claimed on Form 3800, General Business Credit- eFileIT.

Do you own or want to invest in any of these vehicles? Make sure you get the most out of your investment when you file your 2020 Taxes. Claim the credit via Form 8936 and eFileIT on eFile.com.

Additional Energy-Efficient Resources

See more tax credits for being eco-friendly around the home.

Find deductions for improving your home.

View plug-in electric vehicles that qualify for the credit.

Prepare your 2020 Taxes with eFile.com and be assured that any credits you qualify for will be found. The eFile app will guide you through claiming them and attaching to your Form 1040.

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